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Arianne Phosphate aspires to strategic success

20th May 2014

By: Simon Rees

Creamer Media Correspondent

  

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TORONTO (miningweekly.com) – Juniors like to dream big, whether it is finding and delineating an attractive project for acquisition, teaming up with a senior partner, or even bringing an operation on stream through their own endeavours.

But the gap between aiming high and actually hitting the mark can be a wide one; the best juniors make headway by understanding their strengths and weaknesses, avoiding the pitfalls, and knowing where their flagship project rests within the wider market.

Arianne Phosphate is one junior hoping to reap the rewards for its work over the last several years at its Lac à Paul phosphate project located around 200 km north of the Saguenay Lac St Jean region, in Quebec. The scope is broad, and the scale extensive.

GET TOGETHER

The company released a feasibility study for Lac à Paul in October 2013, outlining an openpit operation with a mine life of 25.75 years and a yearly output of three-million tonnes, grading 38.6% phosphorus pentoxide (P2O5) at an average mill recovery of 90%.

The project’s Paul zone has total compliant proven and probable reserves of just more than 472-million tonnes grading 6.88% P2O5 and 75.7-million tonnes of saleable concentrate grading 38.6% P2O5.

Total measured and indicated (M&I) resources for the Paul zone stand at 590.24-million tonnes, grading 7.13% P2O5, while the Manouane zone has a total M&I of 163.80-million tonnes for 5.88% P2O5.  

The project’s deposits are igneous, which tends to have lower grades of P2O5 when compared with sedimentary material. However, igneous rock has the advantage of being mechanically concentrated more effectively.  

The initial capital cost is estimated at $982.5-million for the mine and mill, and $232.2-million for concentrate transportation. An internal rate of return is estimated at 20.7%, with a capital payback rate of 4.4 years before tax and mining duties.

“We’re a junior mining company and can’t develop this project [to fruition] by ourselves because it has a $1.2-billion capital expenditure. We need a senior partner on this,” Arianne CEO Brian Kenny told Mining Weekly Online.

“The partner we’d like will be a senior industry player [in Canada] and maybe somebody else as well, such as the Japanese trading partner,” he said.

“We’re in discussions with people,” he continued. “And we announced the selection of National Bank Financial and Wells Fargo in January to assist us in finding a strategic partner and look at strategic opportunities.”

“So the project has to be as attractive as possible. [That’s why] the size of the resource is hugely important and is the reason we’re trying to increase it,” he added, noting that the goal is to delineate a project with a 50-year mine life.

Kenny also outlined several other project advantages, including access to a gravel road designed for heavy haulage. This can be used by the company to deliver output to the River Saguenay’s north shore, where all-year loading facilities will have to be built.

IMMEDIATE GOALS

In the short term, Arianne will soon be unveiling results from a recent drill campaign, while further drilling will continue over summer. “We’re also doing more metallurgical testing as we’d like to squeeze down the [envisaged] operating costs for strategic reasons,” Kenny said.

Another objective is to continue advancing the project’s environmental status. Arianne submitted its environmental impact assessment (EIA) last year to Quebec’s Ministry of Sustainable Development, Environment, Wildlife and Parks and this is now in the review stage.

“We’ve submitted our EIS and answered all questions [the ministry] has asked of us to date,” Kenny said.

“We’d like to enter public hearings on the project by September or October this year,” he added. Results of the public hearings will be published and followed by a statutory delay of four months.

“Assuming these results are positive, the ministry will take this on board. It will also consider its own analysis. If this is good, and assuming the social acceptability is positive, a ministerial decree will be issued. This is the permit,” he explained.

In terms of social acceptability, Kenny stressed that Arianne has been working hard to develop support at both local and political levels.  

“We’ve put a huge effort into this [and] politicians have come out publicly in favour of the project, which is a big step,” he said. “All of the municipalities directly or indirectly affected have also passed resolutions supporting the project.”

“In addition, the company conducted an economic benefit study for the area. The results are positive and compelling, with 2 000 to 3 000 direct and indirect jobs created during construction and the same during operation,” he said, also citing the benefits of tax revenues that the project could deliver for the province.

FIRST NATIONS FIRST

Developing close ties with the local First Nations communities, the Mashteuiatsh, Pessamit and Essipit, is also a priority. As part of this, Arianne is seeking to establish impact benefit agreements (IBA) with each.

“We are in formal negotiations with the Mashteuiatsh and Pessamit. The Essipit came into the picture little bit later because we were previously considering a different [haulage] route. We’re just about to hand them the first formal document and we’ll be negotiating with them soon.”

“Overall, it will be a two-step process: we will have agreement in principle and then have the IBA,” he said. “It’s obviously preferable to have the agreements in principle signed before you go into the public hearings.”

Kenny outlined several starting points for the IBA, including training and employment guarantees for First Nations peoples and making sure that their customs, beliefs and traditions are respected.

“We may have a royalty, [using] a formula that we can develop together,” he added. “First Nation support is of great importance.”

Taking a wider view, Kenny also stressed that Québec remains an excellent jurisdiction for project development and mining.
  
“I’ve lived in Québec for a long time and I’ll tell anyone in the world that the province is a friendly jurisdiction to do a mining project. There’s a lot of technical competence and a lot of knowledge. It’s easy to hire people and get the right contractors: the people you need to get a project done.”

Edited by Henry Lazenby
Creamer Media Deputy Editor: North America

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